A firm has 350 million in revenues and explicit costs of 150 ...

[chads108]

A firm has 350 million in revenues and explicit costs of 150 million. If its owners have invested 150 million in the company at an opportunity cost of 10 percent a year, the firm's economic profit is:
 a. 50 million.
 b. 150 million.
  c. 185 million.
  d. 200 million.

Question 2

Why are bonds less risky than stocks?
 a. The dividend given on shares is usually less than the coupon-rate on bonds.
  b. Bonds can be issued only by the government whereas shares are issued by private firms.
  c. Bondholders have a claim on the assets of the firm whereas the shareholders do not.
  d. Shareholders are entitled to a share of the company's earnings.
  e. The higher the profit of the firm, the greater the share of the bondholders.

[triiciiaa]

Answer to Question 1

c

Answer to Question 2

c